Is Multifamily Worth the Hype? Analyzing Real Estate Investment

Thanks to popular blogs and sales personalities like Grant Cardone, there is a lot of hype in the media right now surrounding multifamily real estate investing.

Rather than purchasing many single-family homes and renting them out to tenants, investors are centralizing their efforts into one property.  This can range from a simple duplex up through an entire apartment complex.  Even though the multifamily concept is not new, it is seeing a resurgence as investors look to diversify.

With this in mind, our team set out to a) examine the benefits of multifamily investments and b) explain when multifamily might make sense in your real estate portfolio.

The Benefits of Multifamily Investing

1) Consistent Cash Flow — This is the holy grail, the primary reason people gravitate to multifamily.  When you own a single-family home, you end up paying for it every single month through the mortgage.  Shouldn’t your investment pay you consistently each month instead?

Not to mention risk mitigation…  If a tenant vacates or doesn’t pay on time, there are still revenue streams from other tenants to cover the costs.

2) One Roof — Why would you run all over town scouting properties and conducting repairs when you can do everything in one location?  One building makes outsourced property management a breeze and often only requires one on-site manager for large complexes.

3) Easier to Finance — It goes without saying the upfront cost of a multifamily property will be (in most cases) much greater than a single-family investment home.  Multifamily properties easily climb to the $1 million mark and above.

That being said, many investors find it easier to secure loans for multifamily investments on the sheer premise of risk.  Financial institutions value their recurring cash flow and the comfort of knowing a few vacancies won’t sink the deal.

4) Appreciation — Through a multifamily property, investors reap the financial rewards of their renovations much faster than they can with single-family homes.  Think about it…  Increasing the curb appeal of the building, installing new washers, and upgrading amenities doesn’t just affect one person.  It affects every tenant and encourages them to stay.

5) Tax Breaks — With the help of a professional accountant, it’s easy to reap the tax benefits of a multifamily investment in your city.  By providing safe, affordable, and clean housing, you’re able to claim significant deductions and depreciate many items within your building.  Some investors wind up paying zero in property taxes!

Multifamily in Your Portfolio?

Purchasing and managing a multifamily property isn’t for everyone.  It requires an upfront commitment but can pay dividends for years to come.

The decision of adding a multifamily investment to your portfolio often comes down to cost and complexity.

If you’re a seasoned investor and have the resources to put a large downpayment on a property and hire a third-party management company, we highly recommend looking into multifamily.  If you’re just starting out, it likely makes most sense to purchase a single-family home (or a small duplex) and work your way up from there.

To learn more about Miami real estate investment strategies, get in touch with one of our team members at sales@spectrumrg.com or (305) 921-0972.